Fairness and Inequality

Pamela Nash Excerpts

Tuesday 11th February 2014 Commons Chamber

[Pamela Nash (Airdrie and Shotts) (Lab)]

The sun is certainly not shining in Scotland; I have had to send my constituency office staff home because of the snow back in Airdrie.

I am delighted to make a late contribution to this debate, the title of which—fairness and inequality—is the essence of why I got into politics. I am sure that many of my colleagues, at least on the Opposition Benches, would say the same. Much has been said already about the tragedy of in-work poverty, so I shall restrict my comments to the impact of welfare reform and Government cuts on inequality, and I will add my voice, and that of my constituents, to the call for a commission of inquiry to look into the impact of welfare reform and the Government’s other austerity measures on inequality and poverty.

[Jonathan Edwards]

I believe the hon. Lady when she says that fairness and inequality were why she entered politics in the first place, but will she tell the House how she will vote later when we divide on our motion?

[Pamela Nash]

It will not come as a surprise that while I agree with the majority of the motion, I am disappointed by its tone. It does not recognise what the Labour Government achieved on inequality between 1997 and 2010—in fact, it attacks that Government—so I will be abstaining, and I am glad to have had the opportunity to put on the record my reasons for doing so.

In my region of north Lanarkshire, the welfare reforms will take £55 million out of the economy every year, which affects not just individuals whose benefits are being cut, but local businesses in our town centres which are now struggling to cope with a vast reduction in customer numbers. That is damaging the development and visible progress of the last 20 years, during which time we have struggled to repair the damage done to our depleted heavy industry and manufacturing in the west of Scotland.

Partly owing to our industrial heritage, my constituency has relatively high levels of disability and chronic illness—as a result of old injuries from those days—and that has made my community particularly vulnerable to the welfare cuts. Many households have a member living with a disability or illness, as I see every day. I have been particularly perturbed by the scrapping of crisis loans, which is affecting the most vulnerable in our society, and although many of the changes have been mitigated by the Scottish welfare fund, many people are still being left in dire straits. Every day I see people whose benefits have been sanctioned and who are no longer entitled to a crisis loan.

[Dame Anne Begg]

I am sure that my hon. Friend will be as disappointed as I was to learn that, according to figures published today, the Scottish welfare fund has been underspent by a considerable amount. Obviously, those who are losing out are the most vulnerable families. It is a great shame that the SNP Government did not see their way to ensuring that the money was properly spent and properly allocated.

[Pamela Nash]

That does indeed upset me. When people come to me and tell me that their benefits have been subject to sanctions, it usually proves to have been due to an honest error; but are we really saying that, in this day and age, even those who have been sanctioned through their own fault should be starving? The only places that I can tell those people to turn to are my local food banks—and food banks throughout the country are confirming that benefit sanctions are one of the main reasons why people are going to them to obtain food just to survive.

I know that time is limited, so I shall try to keep the rest of my comments brief. The myriad statistics that have been shouted across the Chamber today, and all the political posturing, have sometimes made it difficult to bear in mind that individual people with whose cases we all deal as constituency Members are affected by the cuts that are taking place. An old classmate of mine from primary school came to see me a few weeks ago. He is a former serviceman, and when he came out of the Army he became a security guard, but he is now struggling to find employment. How can he be expected to find a job at a time when more than 2 million people are still unemployed, and at a time when many other servicemen and servicewomen will be joining him in the dole queue as further job cuts in the military are announced?

Most of the jobs that will be available to that ex-serviceman will be part-time jobs, or jobs involving zero-hours contracts. Moreover, he depends on housing benefit to keep a roof over his head, and he has been hit by the bedroom tax. His child’s bedroom has been deemed to be a spare room by the Department for Work and Pensions, because the child also has a bedroom in the mother’s house, so he has had to pay bedroom tax for a long time in order to ensure that he still has regular access to the child.

The Scottish Parliament recently passed a budget to fund complete mitigation of the bedroom tax. I welcome that measure, and I am glad that the Scottish Parliament eventually listened to the Scottish Affairs Committee—of which I am a member, although we are not allowed into the Parliament—but many people have already been affected by the tax, and I have to say that the “smoke and mirrors” approach taken by the SNP to one of the clearest examples of UK Government policy making the poor poorer has been nothing short of shameful. They have sat on their hands and done nothing when they could have taken action.

The UK Government made it very clear that the Scottish Government had the power to mitigate the bedroom tax long ago. The SNP said that there was no cash, and then found £20 million. It subsequently said that its hands were tied, but the Scottish Affairs Committee was told by the Scotland Office months ago that that was rubbish, and that the Scottish Government already had the power to mitigate the tax for all the people who were suffering in Scotland. I ask them now to think about the people who have suffered since the bedroom tax was introduced 10 months ago, and to consider apologising to those people and telling them how they will be recompensed.

As I have said, I regret the tone of the motion, which does not acknowledge the progress made under the Labour Government in alleviating the poverty of families both in and out of work. I hope that the Government will heed the many important points that have been raised by members of all parties today, and that they will establish a commission of inquiry to examine the impact of welfare reform—on the most vulnerable in particular—and to investigate inequality throughout the United Kingdom. I also hope, for my constituents’ sake, that the Scottish Government will immediately take advantage of every lever that their devolved powers have made available to them to protect the people of Scotland, and will not continue to pretend that they are powerless to tackle inequality without independence.

--- Later in debate ---

[Dr Whiteford]

I will not give way. I want to make some progress; I have a lot to get through in a limited amount of time.

The extremes of income inequality that we see today had their genesis in the late 1970s. The hon. Member for Dumfries and Galloway (Mr Brown) challenged the motion’s wording about the upward trend of inequality in the UK. I am prepared to grant him that, in the early years of the Labour Government after 1997, there was a stem in the rising tide of inequality, but if we look at the long-term historical perspective we find that it is clear that from 2003 onwards inequality started to rise again. We can argue the piece about that, and I would not take away from the Labour party things it managed to achieve in government that were beneficial to people, but I question the lack of responsibility we have seen from Members on both sides of the House. They have tried to blame each other for not only the financial collapse, but how we have been dealing with the aftermath. It is incumbent on us all to take responsibility for the situation in which we find ourselves and work out how we can build a more prosperous future for everyone, in which the rewards of our prosperity are shared more evenly.

Today, the richest 10% of the population across the developed world have incomes nine times greater than those of the poorest 10%, but in the UK the margins are even more stark, with the richest 10% having incomes 12 times greater than the incomes of the poorest 10%. Can we really say that a person’s contribution is worth 12 times that of another person? I find that a difficult piece of maths to do; I certainly do not think I work 12 times harder than people who are earning a lot less than me in my constituency, as I know they work very hard in difficult and often demanding jobs.

According to the OECD, the UK is now placed 28th out of 34 in its inequality league, as measured by the Gini coefficient. Of course that is not the only way in which to measure inequality, and some commentators who use a wider range of measures consider the UK’s inequalities to be even more stark. For example, Professor Dorling of Oxford university considers the UK to be the fourth most unequal country in the developed world, despite being one of the wealthiest. Those of us who aspire to live in a fairer, more equitable society will have been shocked by the research published by the Joseph Rowntree Foundation in December, to which reference has been made. It showed not just that 13 million people in the UK are living in poverty, but, for the first time, that more than half of those people live in working families.

We used to hear the mantra that work is the route out of poverty. For people who are able to secure better-paid, full-time jobs that is undoubtedly true, but the reality of modern Britain is that now most poor people are working, but that work no longer guarantees a life above the breadline. About 5 million people in the UK are paid below what would be considered a living wage, and millions of working people find they have to depend on the benefits system to top up their income to adequate levels. My hon. Friend the Member for Na h-Eileanan an Iar (Mr MacNeil) made the point that the report published yesterday by the Living Wage Commission showed that 21% of the work force are being paid below a living wage, which is a 9% increase in the past 12 months. People cannot get out of low-paid work. One of the most important points in the report, which echoes comments made by the hon. Members for North East Somerset (Jacob Rees-Mogg) and for Strangford (Jim Shannon), and my hon. Friend the Member for Moray (Angus Robertson), was that once people are in a low-paid job, it is extremely difficult for them to get out of it. Only 18% of those people manage to get out of minimum wage work in the course of their working lives; a decade later those people are still stuck in those jobs. So work is a route out of poverty only for those people who have well-paid jobs.

A number of hon. Members, the first being the Minister, mentioned food banks. We have seen a huge increase in their use over the past two years, which is a shocking development in a wealthy country. We know that that increase has been driven by changes to the benefits system, particularly by delays in benefits payments and the increased use of sanctions. It has also been driven by the rising cost of living. One thing that has shocked me most in my constituency is the number of working people who are now dependent on food aid parcels. Half a million people in the UK now depend on food aid, and instead of squabbling about whose fault it is and whose Government the levels rose most under, we should be trying to tackle the problem and ensure that people have enough to eat.

Ours is a mature democracy with a well-developed welfare state, but the tax and benefits system remains the main lever through which Governments mitigate poverty and inequality. The recent reforms of the past couple of years have been overwhelmingly regressive and have exacerbated hardship. The promise from the Chancellor in recent weeks that £60 billion of further cuts are on the way shows that there will be no respite for disadvantaged people in modern Britain. Of all the regressive measures we have seen in the past few years, perhaps the changes to housing benefit best illustrate both the willingness of the Government to squeeze the incomes of the poorest households and the London-centric drivers of policy making. The under-occupancy penalty, or the bedroom tax as it is better known, is punishing disadvantaged people in our society who live in social housing and need help with their rent. It is squeezing the incomes of those who are already most hard pressed financially and driving the most extreme forms of inequality. In Scotland, around 80% of those affected by the bedroom tax are also affected by disability, which highlights that link between poverty and disability. Disabled people are still disadvantaged in the workplace and often find it hard to make ends meet. The proportion of disabled people in the UK as a whole is slightly smaller than it is in Scotland, but it still represents two-thirds of the households affected by the bedroom tax.

We also have a structural mismatch between the available housing stock and the needs of tenants. Some 23% of the housing stock is one-bedroom accommodation, yet 60% of tenants need a one-bedroom house. Even if it was in anyone’s interest to play musical chairs with housing allocations, there are simply not enough one-bedroom homes to go round. Provision of one-bedroom lets in the private sector also falls well short of demand and, in any case, costs the public purse considerably more than renting from social landlords. As well as pushing low-income households into debt, the policy is costing more than it saves, and the Government’s persistence in pursuing the policy is foolhardy in the extreme.

I know that the Scottish Government have already made extensive efforts to mitigate the impact of the bedroom tax by increasing the budget for discretionary housing payments to the legal limit. In answer to the strange and bizarre interventions by the hon. Member for Airdrie and Shotts (Pamela Nash), there are legal constraints on how much the Scottish Government can top up those payments.

[Pamela Nash]

rose—

[Dr Whiteford]

No, I will not waste time taking an intervention from the hon. Lady. Her earlier intervention was really quite unbecoming. There has been cross-party support in the Scottish Parliament—not just from the Labour party and the SNP but from the Liberal Democrats who are represented on the Government Benches—to increase the discretionary housing payments budget to mitigate the effects of the bedroom tax. I therefore ask the Secretary of State, who is in his place, to talk to his colleagues in the Department for Work and Pensions about the matter so that when the Deputy First Minister, Nicola Sturgeon, is in London on Thursday, she can meet the Secretary of State for Work and Pensions to progress the issue further.

Transfers made to low-income households are the major tool through which our tax and benefits system compensates for the low-wage culture and, in a small way, mitigate the inequalities created by the structure of our labour market. Over the past two years, as the hon. Member for Llanelli (Nia Griffith) highlighted, changes to tax credits have created significant reductions in the incomes of families in low-paid work. Although some very low earners have been lifted out of tax, the gains have been more than cancelled out by cuts to tax credits and the freeze in the uprating of other benefits, which have fallen in real-terms value. That point was also made at length by the hon. Member for Oldham East and Saddleworth (Debbie Abrahams).

The Government’s own distributional analysis of their tax and benefit changes shows that the lower half of the income spectrum has paid the greatest price of austerity, while tax cuts at the very top end have allowed the gap to grow between the haves and the have-nots.

A number of Members have drawn our attention to the fact that women make up a disproportionate share of the low-paid work force. In an early intervention, the hon. Member for Coventry South (Mr Cunningham) made the point that the Government have made tax adjustments of £14 billion, £11 billion of which have fallen on women. It is unfortunate that he was not able to stay to make a longer contribution, as I am sure that it would have been worth while.

Women are more likely to be in low-paid, part-time work. They are more likely to be working in insecure, temporary jobs, or on zero-hours contracts, and more likely to be working in jobs for which they are overqualified. More than 40 years after the Equal Pay Act 1970, women are still paid 12% less than men. When we look at who is poor in the UK, we find that women, especially women with children, are over-represented. When we look at who has been impacted most by the UK’s benefit reforms, we see women once again in the front line. That is largely because women take on the greater share of responsibility for child care and for looking after elderly relatives. Child benefit, child tax credit and working tax credit are all paid to the main carer of children, and when the changes were introduced, 83% of in-work families receiving those benefits had a woman payee.

The second half of the 20th century saw women enter the labour market in ever-greater numbers, to some extent masking the ever-widening gulf in wages by increasing overall household incomes. None the less, women are losing out heavily and as a society we lose out because women are not reaching their full potential. According to a recent report by the Resolution Foundation, two thirds of mothers find the cost of child care a barrier to working more. The UK labour market has some of the lowest participation rates by mothers of any OECD country. Some women make a choice not to work when their children are small and choose to take a break in their working life. Many, particularly those with more than one child, want to work part time, but most women find that their choices are financially constrained. There is clear evidence that many women who want to work full time or work more hours face barriers because they cannot afford child care. They cannot get work in the hours for which they are available, or they cannot get the kind of work for which they are qualified. We all know families in which a second earner has given up work because they cannot afford the cost of child care for pre-school children. That is particularly the case for people on low and average earnings, but I know men and women on graduate-level salaries who have given up work because child care for more than one child, plus commuting costs, adds up to working for free. That is bad for families in the longer term, but it also extremely bad for our economy.

Child care has been mentioned by a number of speakers, and in my view, a step change in child care would be the single most transformative policy that the UK Government could make in tackling inequality, because it would boost prosperity, improve work incentives for parents, empower women in the workplace, and would help to tackle child poverty. The hon. Member for Foyle (Mark Durkan), in an important intervention, discussed the Child Poverty Act 2010, and the important gains that were won with cross-party support in the House in the previous Parliament. This week, the Joseph Rowntree Foundation published a report on child poverty in Scotland that showed that, although gains have been made, progress is under real threat because of the austerity measures introduced by the Government.

Child poverty in Scotland has fallen by twice as much as in England. Most reductions in poverty are attributable to improvements in employment rates, but it has been argued that the additional fall in child poverty in Scotland, where it is now 40% lower, is due to a shift to full working—both parents in the family are working, and at least one of them is full time. That has not been replicated across the UK. I have no doubt that that is partly due to the fact that in Scotland we have the best child-care package anywhere in these islands. We have to go significantly further if we are to compete with the best in Europe and have ambitions for the next generation. Otherwise, we face the threat of more and more children falling into child poverty.

The Scottish Government have made huge efforts to try to ensure that all our young people have opportunities. A point made early in the debate by the hon. Member for South West Bedfordshire (Andrew Selous), which was not picked up very much, concerned the issue of skills, which are at the heart of how we increase prosperity and close the wage gap between high earners and lower earners. The Scottish Government have introduced the “Opportunities for All” programme, which means that every single school leaver has the offer of a positive destination to take up when they leave. We have record numbers of young people in apprenticeships. We also have record numbers of people completing apprenticeships. Some 92% of young people who complete an apprenticeship are in work six months later, with 79% of them in full-time work. Over 90% of our school leavers are now in positive destinations, and 89.5% of them are in work nine months later, or in education or training. That is the highest it has ever been, and it shows what can be done when we put our mind to it.

Today’s debate shows exactly why Scotland needs the full fiscal levers of a normal country to tackle inequality, why Wales needs the power to grow its economy and improve the prospects of its people, and why it is in the interests of the whole UK not to bury its head in the sand any longer but take responsibility for the failures of the past and respond to the needs of our citizens in the next generation. The motion calls for a commission to investigate the impact of welfare and spending cuts on poverty and inequality, which reflects the wishes of the House expressed on 13 January. Importantly, it goes further, because we cannot really tackle poverty, particularly the kind of poverty that we have in the UK, unless we understand inequality and take steps to tackle its long-term drivers. That is why I fully support the motion, and I hope that Members on both sides of the House who have listened carefully to the debate will join us in the Lobby. The motion would allow us to address the shortcomings of the past, and I hope that all Members will join us in building a fairer and more equal society.